SEC Suspends Trading in the Stock of SwedishVegas, Inc.
The Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the Exchange Act), of trading in the securities of SwedishVegas, Inc. (SwedishVegas), of Arcadia, California, at 9:30 a.m. EDT on July 23, 2008, and terminating at 11:59 p.m. EDT on Aug. 5, 2008.
The Commission temporarily suspended trading in the securities of SwedishVegas because there is a lack of current and accurate information concerning the securities of the company.
The Commission cautions brokers, dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not it has complied with the rule, it should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, it should refrain from entering quotations relating to the SwedishVegas' securities until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation that is in violation of the rule, the Commission will consider the need for prompt enforcement action. (Rel. 34-58211)
Chairman Cox to Testify
Chairman Christopher Cox will testify before the House Financial Services Committee on Thursday, July 24, 2008, at 10:00 a.m. The hearing, which is concerning "Systemic Risk and Financial Markets", will be held in Room 2128 of the Rayburn House Office Building.
Commission Revokes Registration of Securities of 21st Century Technologies, Inc. for Failure to Make Required Periodic Filings
On July 23, 2008, the Commission revoked the registration of each class of registered securities of 21st Century Technologies, Inc. (21st Century) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, 21st Century consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of 21st Century's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against 21st Century in In the Matter of 21st Century Technologies, Inc., Administrative Proceeding File No. 3-13005.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of 21st Century Technologies, Inc., Administrative Proceeding File No. 3-13005, Exchange Act Release No. 57657 (April 11, 2008). (Rel. 34-58210; File No. 3-13005)
The SEC Charges Hedge Fund Adviser and Employee in Connection With Unauthorized Transfers Among Funds
The U.S. Securities and Exchange Commission today instituted a settled administrative proceeding charging Thomas C. Palmer, formerly of Aeneas Capital Management, L.P. (Aeneas), with violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (Advisers Act). In the same settled proceeding, the Commission also charged Aeneas for failing reasonably to supervise Palmer within the meaning of Section 203(e)(6) of the Advisers Act.
The Commission found that Thomas C. Palmer, while serving as the director of operations for Aeneas, made five unauthorized transfers of cash totaling $13.4 million from Aeneas Evolution Portfolio, Ltd. (Evolution) and Aeneas Portfolio Company, L.P. ("Portfolio") to a third hedge fund, Priam Holdings Ltd. (Priam), to satisfy Priam's margin calls. Evolution, Portfolio and Priam are separate funds operated by Aeneas. The Commission also found that Aeneas failed reasonably to supervise Palmer, who was responsible for making the unauthorized transfers. Aeneas failed to have in place adequate policies and procedures designed to detect and prevent such unauthorized transfers of cash among funds.
According to the Commission's findings, Priam invested primarily in microcap foreign issuers that trade on the Malaysian securities exchanges. Beginning in Spring 2006 and continuing into the summer, Priam accumulated a significant trading position in Iris Corporation, a Malaysian microcap issuer that trades on the Malaysian Stock Exchange but that does not trade on U.S. markets. Priam's position in Iris Corporation, as well as its positions in other issuers, was highly leveraged by using funds borrowed from its prime broker to trade on margin. In early July 2006, the position sizes within the Priam portfolio were increased to the point where there were several margin calls.
In an attempt to satisfy the margin calls, Palmer made five separate transfers of cash, totaling $13.4 million, to Priam from Evolution and Portfolio, despite knowing that Evolution, Portfolio and Priam were separate funds. The cash transfers were reversed in early August 2006 and the funds were sent back to Evolution and Portfolio. As a result, no investor funds were lost and Aeneas subsequently paid investors for the interest earned on the funds for the period during which they were in Priam's account.
Under the terms of the settlement, Palmer, without admitting or denying the Commission's findings, consented to the issuance of an administrative order: (i) requiring him to cease and desist from committing or causing any violations and any future violations of Sections 206(1) and 206(2) of the Advisers Act; (ii) suspending him from association with any investment adviser for a period of 12 months; and (iii) requiring him to pay a $65,000 civil penalty. Aeneas, without admitting or denying the Commission's findings, consented to the issuance of an administrative order imposing a censure and requiring it to pay a $150,000 civil penalty. (Rel. IA-2757; File No. 3-13092)
In the Matter of Richard McGill, William Sanders, Michael Tuchman, and Danny Rayburn
The United States Securities and Exchange Commission (Commission) announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions (Order) against Richard McGill, William Sanders, Michael Tuchman, and Danny Rayburn. The Order finds that on June 10, 2008, final judgments were entered by consent against McGill, Sanders, Tuchman, and Rayburn, permanently enjoining each of them from future violations of Sections 5(a) and 5(c) of the Securities Act of 1933, and Section 15(b) of the Securities Exchange Act of 1934, in a civil action entitled Securities and Exchange Commission v. Real Estate Partners, Inc., et al., Civil Action Number SACV 07-1022 AG (RNBx), in the United States District Court for the Central District of California.
The Order further finds that the Commission's complaint alleged that McGill, Sanders, Tuchman, and Rayburn participated in the unregistered offer and sale of defendant Real Estate Partners, Inc.'s securities, and acted as unregistered broker-dealers.
Based on the above, the Order bars McGill, Sanders, Tuchman, and Rayburn from association with any broker or dealer, with the right to reapply for association after five years. McGill, Sanders, Tuchman, and Rayburn all consented to the issuance of the Order without admitting or denying any of the findings in the Order, except they admitted the final judgment entered in the civil action. (Rel. 34-58213; File No. 3-13093)
In the Matter of Donald G. Ryan
The United States Securities and Exchange Commission (Commission) announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions (Order) against Donald G. Ryan. The Order finds that on June 10, 2008, a final judgment was entered by consent against Ryan, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, in a civil action entitled Securities and Exchange Commission v. Real Estate Partners, Inc., et al., Civil Action Number SACV 07-1022 AG (RNBx), in the United States District Court for the Central District of California.
The Order further finds that the Commission's complaint alleged that Ryan made fraudulent misrepresentations in the unregistered offer and sale of defendant Real Estate Partners, Inc.'s securities, and acted as an unregistered broker-dealer.
Based on the above, the Order bars Ryan from association with any broker or dealer. Ryan consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the final judgment entered in the civil action. (Rel. 34-58214; File No. 3-13094)
SEC Obtains Emergency Relief Against Stock Based Loan Operators; Judge Orders Asset Freeze, Preliminary Injunction, and Appointment of Receiver
The Securities and Exchange Commission today announced that on July 17, U.S. District Judge Edmund A. Sargus, Jr. entered an order freezing assets, preserving records and property, and preliminarily enjoining defendants Michael S. Spillan and Melissa K. Spillan of Gahanna, Ohio, from violating the antifraud provision of the federal securities laws [Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder]. Judge Sargus also ordered the appointment of attorney Frederick L. Ransier as Receiver over defendants One Equity Corporation, Triangle Equities Group, Inc., Victory Management Group, Inc. and Dafcan Finance, Inc. (the One Equity Companies), which are located in Westerville, Ohio. The Commission sued the defendants on July 10 alleging they were operating a fraudulent stock loan program.
The Commission's complaint alleges that, since at least 2004, the Spillans and the One Equity Companies raised approximately $70 million from 125 borrowers by holding themselves out as stock based lenders, underwriters, or administrators. According to the complaint, the defendants raised the money by inducing borrowers to transfer ownership of millions of shares of publicly traded stock to them as collateral for purported non-recourse loans. The defendants promised to return the shares to borrowers who repaid their loans. In fact, the defendants generally sold all of the stock received from borrowers in order to fund each loan. Unbeknownst to borrowers, after funding each loan, the Spillans did not set aside any cash reserves to repurchase and return shares to borrowers who repaid their loans. Instead, they used all of the money to pay expenses, including over $1 million in salaries and benefits to themselves.
Judge Sargus previously entered a temporary restraining order on July 10 prohibiting defendants from making any loans, making any disbursements from business accounts without prior Court approval, paying salaries to the Spillans, and destroying or discarding any relevant financial records. [SEC v. One Equity Corp., et al., Civil Action No. C2-08-667, USDC, S.D. Ohio] (LR-20652)
INVESTMENT COMPANY ACT RELEASES
The Mexico Fund, et al.
A notice has been issued giving interested persons until August 11, 2008 to request a hearing on an application filed by The Mexico Fund, Inc., et al. ("Fund"), under Section 6(c) of the Investment Company Act of 1940 ("Act") for an exemption from Section 19 (b) of the Act, and Rule 19b-1 under the Act. The order would permit the Fund, a registered closed-end management investment company, to make periodic distributions of long-term capital gains with respect to its common stock as part of a managed distribution plan as frequently as twelve times each year. (Rel. IC-28332 - July 17)
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